Surging oil price and new assets drive BP profits to record highs

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The Independent Online

BP forecast yesterday that oil prices would continue to exceed $30 a barrel for the next few years as it reported a 43 per cent jump in quarterly net profits to $3.9bn (£2.2bn), or £1m an hour.

The underlying profit was $3.5bn, before exceptional items, for the third quarter of the year, the highest underlying quarterly profit the company has ever produced. For the first nine months of the year the $12.6bn profit is another record for the oil giant, up 26 per cent on the period last year.

The company is on course to make nearly $17bn for the full year. Oil prices have hit new records, on a weekly or even daily basis, for much of this year, to exceed $50 a barrel.

BP said that for the first time production from its new areas, such as Angola, was outweighing declining output at mature fields - even excluding the company's Russian acquisition, TNK. Tony Hayward, the head of exploration and production at BP, said: "We have reached an inflexion point. In the fourth quarter, new areas will materially offset decline at existing assets." During the third quarter, oil and gas output increased 11 per cent to average 3.9 million barrels per day, of which TNK-BP contributed 945,000 bpd.

Lord Browne of Madingley, BP's chief executive, said that the company was sticking with its planning assumption of $20 a barrel as "things have a habit of changing". However, the actual price that the company expects to see over the next four years or so would be significantly higher. Lord Browne said: "It seems that on the basis of the recent track record and the supply/demand balance, oil prices have a support level of around $30 per barrel for at least the medium term, underpinned by Opec discipline and their needs to maintain revenue."

He insisted that despite its low oil price assumption, BP and other leading oil groups were investing enough to meet demand. BP's capital expenditure will be $14bn this year and next. "We're in a mature type of industry. The growth rates we have are 2 or 3 per cent. One has to be realistic about how much it is possible to grow a company in that sort of sector," he said.

Separately, the International Energy Agency said yesterday that $3 trillion may need to be invested to meet a 60 per cent surge in demand by 2030. World oil demand is forecast to grow from 77 million bpd in 2002 to 121 million in 2030. Two-thirds of the growth will come from developing nations. "Huge investments will be needed in oilfields, tankers, pipelines and refineries. Financing will be a major challenge," the IEA, which advises 26 industrialised nations, said.